Auditor gives disclaimer of opinion on Alpha Energy's finances

ALPHA Energy Holdings said on Wednesday that independent auditor Nexia TS Public Accounting Corporation has issued a disclaimer of opinion in the group's financial statements for the financial year ended Dec 31, 2019 (FY2019).

With the financial statements prepared on a going-concern basis, Nexia has written that it is "unable to obtain sufficient audit evidence to be able to form an opinion as to whether the going-concern basis of preparation of the accompanying financial statements of the group or company is appropriate".

The financial statements had been prepared on a going-concern basis based on assumptions which were "premised on future events and market conditions".

However, Alpha Energy's board said that it believes that the group is able to continue as a going-concern with the completion of the acquisition of Kydon Learning Systems Institute and the proposed capital investment in the form of a convertible loan of S$24.0 million.

It had also in July entered into a S$1 million short-term loan agreement with Didi Investments; in September, it entered into a forbearance-and-release agreement with a provider of a bank loan.

For FY2019, the group's current liabilities exceeded its current assets by US$165.42 million. In addition, the group incurred a net loss of US$190.80 million and recorded net operating cash outflows of US$3.16 million during the financial year.

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Nexia TS Public Accounting wrote: "The group has also ceased to generate revenue from its business of the sale of crude oil as the drop in oil prices, coupled with the Covid-19 situation affecting the global oil demand, had stifled its hopes of obtaining a favourable outcome for the funding required to continue with the development of the group's exploration and evaluation assets in relation to the Mustang Project."

Certain creditors have also filed liens against certain assets, taken legal action against the group to recover outstanding amounts due to them, and filed claims for certain damages.

The auditor also noted that consolidated financial statements do not reflect adjustments that may be recognised by the group from various legal claims.

Adjustments will also have to be made to reflect the situation that assets may need to be realised under circumstances other than in the normal course of business and at amounts which could differ significantly from the amounts at which they are currently recorded.

Alpha Energy called for the suspension of its shares on Nov 18, 2019.